I am determined to do our taxes myself and have entered identical info into both Turbo Tax, Tax Act and one of my own calculations. All three differ by at least $400 when completed. It appears to be in the income section - rental income and capital gains. Very frustrating. Anyone know why the two programs would be different? Unless I fully pay, I can't see the actual schedules but if they are different, I am not going to pay just yet.
Writing tax software is trying to hit a moving target. The laws change every year and the software has to be changed to keep up with them. I know the major tax-software companies release updates to their programs pretty much from the day they're put on the market until April 14, sometimes to fix errors and sometimes to incorporate changes in the tax code. I'm guessing you have applied all available updates to both applications, but the difference could be in something one publisher or the other has not yet changed.
In addition, the logic behind the code must contain some assumptions about how the data is treated -- how deductions may be treated, sums or differences which are then used in later calculations; etc. I'd guess that, if you brought your tax records to two different tax accountants, you would get different results from them, too.
I would use the method that gives you the best results. The major tax-software companies stand behind their products and you know your assumptions, so if the tax authorities challenge your return(s), there will be an explanation for how you arrived at them.
Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome. - Booker T. Washington
I like Steve's answer. However, several years ago I stopped doing my own when I had a 6000 tax bill one year with Turbo Tax and switched to a tax preparer. She has saved us much more over the years than we have paid her in fees. So when you have a complicated issue, you might want to go just one year to a tax preparer and see if you ended up substantially better off. If not, then you can go back to doing them yourself next year.
Our preparer is doing my dad's taxes this year because he is too ill to do them. I am thinking of asking her to look at his last year's and refiling if she sees it would be beneficial.
If it happened to me, I would print out both returns or one and compare it to the other on line to try and see if I had answered a question inaccurately. Turbo Tax has saved us thousands of documented dollars over the years in missed deductions and crazy calculations, etc.
Worked for the IRS for 31 years and yes, if you gave the tax return to 15 preparers, you would probably get 15 different answers. Blame our Congress for the complex crazy tax laws. Over that 31 years, I started being able to quickly and accurately calculate a tax with pencil and a simple calculator. Now it takes complex programs and it is even hard for the IRS to keep up.
Irks me that I have to pay before I can even look at the actual documents. Kind of hard to understand their calculations without seeing the forms.
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